Telkom will do itself a favour by launching a Naked DSL service – as it will help grow the fixed-broadband market – but it comes with significant challenges and risks.
This is according to Marius Olivier, head of XDSL’s commercial business and former Telkom Wholesale manager.
Olivier told MyBroadband that Telkom’s DSL growth has been slow because consumers are forced to purchase Telkom Line Rental as a prerequisite for ADSL, although they do not need it.
A Naked ADSL service is the obvious solution, but it is challenging for Telkom to make the product commercially viable.
“The market unfortunately does not have a full understanding of the cost for the DSL, as well as the line rental, and therefore is expecting to only pay for the DSL Line,” said Olivier.
He said Telkom cannot and will not provide a Naked DSL service at the current Resell DSL rates, as it will not be covering its cost on the Line Rental.
“I think it will take some out-of-the-box thinking to determine a Naked DSL rate that will entice consumers to take up the offering to effectively grow fixed broadband for Telkom.”
The challenge also touches on Telkom’s Access Line Deficit argument, where telephone calls are supposed to cross subsidize the Line Rental costs.
The decline in Telkom’s fixed-line revenues, and the decline in the number of fixed lines, does not aid in the quest to offer Naked DSL at a market-related price.
“You can notice what challenges Telkom face before they can make a decision as to whether or not to launch a Naked DSL offering.”
In 2015, Telkom’s managing director for wholesale services Prenesh Padayachee said the company was looking into offering a Naked DSL service.
Whether Telkom will offer Naked DSL is dependent on the outcome of its current analysis into the restructuring of its fixed-line costs.
“If, upon completion, the analysis proves favourable, we will still need to go through a series of pilot initiatives,” said Padayachee.
Telkom highlighted that the copper infrastructure still needs to be maintained irrespective of a voice service or not.
“Therefore very careful consideration must be given in determining what the ‘naked ADSL’ model will look like, and what the impact will be on the various aspects of and players in the broadband eco-system.”